JSW sells 50% in energy co

TNNApr 4, 2006, 12.45am IST

MUMBAI: JSW Steel has sold its 50% stake in JSW Energy to Samarth Holdings, a holding company promoted by JSW vice-chairman Sajjan Jindal, in a deal valued at Rs 513 crore. The move is part of Sajjan Jindal's endeavour to create a separate power company under the JSW Group.

The remaining 50% in the JSW Energy is held by OP Jindal Group companies, such as Sun Investments and Vrindavan Securities. The transaction will boost JSW Steel's bottomline in the fourth quarter by Rs 260 crore. It had purchased the equity in JSW Energy for Rs 144 crore. The sale was carried out after an independent valuation.

"We had no reason to continue with strategic investments in a power company since JSW Steel has its own captive plants. We have encashed our investments," said JSW director finance Seshagiri Rao. JSW Energy originally planned to supply power only to JSW Steel, but the group later decided to expand the scope of its business to generation transmission and distribution.

JSW Steel is now fed by independent power generation units which have a capacity of 230 MW. JSW Energy has a generation capacity of 260 MW, the bulk of which is supplied to Karnataka Power Transmission Corporation (KPTCL). The company also supplies close to 100 MW to Tata Power's Mumbai system.

The company is pursuing generation projects in Mangalore and Rajasthan. Its subsidiary, JSW Power Trading (JPT), already has the licence to buy and sell energy. JSW Energy, with a turnover of Rs 500 crore and profit of Rs 60 crore, is an unlisted entity held closely through holding firms of the OP Jindal Group.